Challenges only result from estimating the denominator level,but not the costs in the numerator of the fixed manufacturing cost rate.

Question

Quizplus · Accepted Answer

The statement is incorrect. Challenges can result from both overestimating the denominator level (which results in an unnecessarily high fixed manufacturing cost rate) and underestimating the costs in the numerator (which results in a fixed manufacturing cost rate that is too low). Both of these scenarios can lead to challenges in accurately pricing products and determining profitability.

Challenges Only Result from Estimating the Denominator Level,but Not the Costs